This morning, we issued our earnings release, shareholder letter, and trending schedule, and these materials can be found on our website at ir.wbd.com. Both The Pitt and Industry have become cultural sensations with their new seasons, which debuted in the first quarter of 2026, seeing 30% and 50% respective audience growth versus their prior season. Over the course of the Winter Games, we saw more than 50% growth in linear hours viewed compared to the 2022 Winter Games. I guess, do you see any issues with Discovery Global being 3-4 times levered, given the free cash flow dynamics of DG right now?

You know, I'll speak as the CFO here again for a second, the capital structure. Absolutely sustainable, and there is a huge opportunity because as we've shown in the past, we are very well able and willing to leverage the opportunities in our long-dated, low-interest capital structure. Penetration growth in our existing markets, driven by partly the content slate, a sharper marketing focus, social outreach that is strengthening. We announced this partnership with CJ last year on Korean content, which also obviously has a great track record of traveling well.

Certainly, local international content continues to be important, but we don't see a certainly major step change needed to continue to drive our growth. The real fruits will start coming in 27, 28, when we return to some of our biggest franchises, you know, launching in that timeframe and returning to those franchises. As you pointed out, we have done significantly better, and the sequential improvement that you mentioned is after digesting 100 basis points of NBA headwinds in terms of ad sales. You know, as I mentioned earlier, I think, you know, we can see some real stability, potentially even a little bit of growth in ad sales going into 2026.

What went well
  • Warner Bros. Motion Picture Group delivered a historic 2025 with nine films debuting number one at the box office, seven consecutive films opening above $40 million (a studio first), and 16 total weeks atop the global box office.
  • The film slate won nine Golden Globe Awards (including Best Picture, Musical or Comedy for One Battle After Another) and earned an industry-leading 30 Academy Award nominations.
  • HBO continued delivering hits, with It: Welcome to Derry posting the fourth-strongest debut season in HBO history at 27 million viewers per episode, while early-2026 returns showed The Pitt and Industry growing audiences 30% and 50% versus prior seasons.
  • Streaming exceeded its 130 million subscriber target set in August 2022 and is on track for more than 140 million by end of Q1 and over 150 million by year-end.
  • The 2026 Milano Cortina Olympic Winter Games were a major success, with more than 50% growth in linear hours viewed versus the 2022 Winter Games and more than tripled streaming audience across Europe.
What went wrong
  • Secular headwinds persist in the global linear networks business, requiring continued transformation and efficiency management.
  • The video games business was in a reset year in 2025 following unsuccessful 2024 launches, with the pipeline not replenished; 2026 is expected to look similar to 2025, and the real fruits won't arrive until 2027-2028.
  • Domestic advertising absorbed roughly 100 basis points of NBA headwinds in terms of ad sales during the sequential improvement.
  • Separation- and transaction-related processes (Netflix transaction, Paramount Skydance discussions) introduced ongoing investor focus and below-the-line costs.

Guidance Changes

MetricPeriodCurrent guidance
Total streaming subscribersEnd of Q1 2026More than 140 million
Total streaming subscribersFY2026 (year-end)Well on way to exceed 150 million by year-end
Discovery Global net leverageAt spin (summer 2026)Roughly 3.3 times, expected single B to low double B ratings
Streaming profitBy 2030Internal forecast for streaming profits to roughly triple
International ad salesFY2026Flat to slightly up; real stability with potential slight growth
Debt allocation to Discovery GlobalAt spinEstimate range of 0 to $2 billion; targeting not to move any debt around

Performance Breakdown

MetricYoYNote
Domestic advertising Sequential improvement New upfront kicked in, good scatter premiums, and strong underlying audience delivery, after digesting 100 bps of NBA headwinds.
International advertising Outperformed relative to U.S. EMEA, the largest region, continued to do very well; free-to-air presence supports flat-to-slightly-up expectations into 2026.
Linear networks viewership 30% of all U.S. prime-time cable viewing 17 of last year's top 25 new cable TV series and improved general entertainment viewership across all key networks.
Olympics linear hours viewed Up more than 50% vs. 2022 Winter Games Strong Milano Cortina Winter Games delivery; streaming audience more than tripled across Europe.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Original content investmentCanceled movies/series down 50-60%; focus on deleveraging and debt repaymentTripled down on hiring top writers/directors and investing in original films and TV (Sinners, Weapons, One Battle After Another) producing a creative renaissance—
Discovery Global spin-offInvestor concern over leverage and Versant as a compPositioned as a global leader with unmatched international scale, ~3.3x sustainable leverage, and growth opportunity via sports, CNN, and discovery+—
Streaming growth leversScaling HBO Max globally as a four-year core priorityFive levers: content slate, volume/penetration, product enhancements, retention/churn, and monetization (price plus nascent ad sales)—
Video games strategyDistracted across too many IPs and studios; unsuccessful 2024 launchesReset to proven studios/games/players; 2026 LEGO Batman and Game of Thrones: Dragonfire, with major franchises returning 2027-2028—

Q&A Summary

Does Discovery Global being 3-4 times levered pose issues given its free cash flow, and why isn't Versant a good comp?
Gunnar declined a direct competitor comparison but emphasized Discovery Global's opportunity: unmatched international scale, iconic brands reaching 1 billion people, trusted CNN/TVN journalism, a world-class sports portfolio, and a profitable discovery+. He said ~3.3 times net leverage is absolutely sustainable, expects single B to low double B ratings, and is not losing sleep over leverage, noting the 0-to-$2 billion debt range in the proxy is just wiggle room with a target of not moving debt around.
What is now being appreciated about WBD's premium content and franchise IP, how hard is building new franchises, and what drives the goal to roughly triple streaming profits by 2030?
Zaslav said what was missed earlier was the hiring of a great creative leadership team and aggressive investment in original content (Sinners, Weapons, One Battle After Another) and revived franchises (Batman II, Minecraft II), noting Minecraft made nearly $1 billion and returns in 2027. J.B. outlined five growth levers: content slate (10 years of Potter from early 2027), volume/penetration (new European markets, password-sharing enforcement scaling in 2026), product enhancements, retention/churn, and monetization via pricing and early-stage ad sales.
Can you provide more color on the video games pipeline for 2026 and the 2026 EBITDA contribution, and break down the advertising improvement domestically (ex-sports) versus international?
J.B. said 2025 was a reset year refocusing on proven studios; 2026 will look similar to 2025 with two big launches (LEGO Batman in May from TT Games, and Game of Thrones: Dragonfire mobile this summer), with the real fruits in 2027-2028. Gunnar said the U.S. ad market was consistent with prior quarters but WBD did significantly better after 100 bps of NBA headwinds, driven by the new upfront, scatter premiums, and strong audience delivery across all key networks; international outperformed the U.S. with EMEA notably strong.
What can you tell us about Discovery Global cost savings (beyond NBA) and EBITDA trends, and what is your appetite for building the sports business and securing additional rights?
Gunnar pointed to the long-range plan in the proxy, cited a big benefit from NBA cost savings, and emphasized continued efficiency focus including AI to generate more output at the same cost. On sports, WBD retains appetite for rights as a key strategic pillar but will remain disciplined, avoiding deals that don't make financial sense while staying involved in every process and valuing its existing partnerships, with continued appetite even after the Discovery Global separation.

More on Warner Bros. Discovery, Inc.

Reported 2026-02-26 · figures from the Warner Bros. Discovery, Inc. Q4 2025 earnings call.

See how Top Bucket AI works for your firm

Request Demo
Top Bucket AI Research

Stay ahead of private markets

Research and market intelligence for private-markets professionals.

✓

You're subscribed.

Thanks for signing up.